Colorado must overhaul its evaluation and treatment of mentally incompetent criminal defendants under a watershed agreement announced Friday ending a yearslong legal battle over how to keep them from languishing in county jails.

The Colorado Department of Human Services agreed Friday to hire a cadre of new clinicians, tighten certain treatment deadlines and shift care for many criminal defendants from state psychiatric hospitals to community-based programs.

If it doesn’t, the state could face fines of up to $10 million a year — a new cudgel meant to ensure the state keeps its promises after it broke the terms of two previous settlements.

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The state’s capitulation marks the most sweeping changes in its legal battle with Disability Law Colorado, a Denver-based nonprofit that first sued the agency in 2012 after mentally incompetent criminal defendants — often facing minor, nonviolent charges — were found suffering in county jails for months while awaiting treatment at the Colorado Mental Health Institute at Pueblo.

“This is really a true comprehensive package that is going to streamline mental health services for thousands of Coloradans to come,” said Iris Eytan, a lawyer representing the nonprofit. “We think it’s probably one of the most influential civil rights agreements in Colorado in at least the last decade.”

She doubted the state could implement the agreement’s changes before a June 1 deadline when it could begin facing fines. About 70 or 80 mentally incompetent criminal defendants are being kept too long in county jails while waiting for a hospital bed, she said.

“It is known at this point that they’re not going to be able to get into compliance with those time frames,” Eytan said. “And so they’re likely going to be paying millions of fines just this year.”

In a statement, Michelle Barnes, the state agency’s executive director, said the deal was “smart and beneficial” for patients in need, and would lead to “tangible improvements to a system that serves some of Colorado’s most vulnerable citizens.”

The agreement appeared to put immediate pressure on state lawmakers to ensure the department makes good on its promises. The agency’s success hinges on state lawmakers approving new funding for the department, said Mark Techmeyer, an agency spokesman.

No cost estimate for those changes was given in the agreement, nor in the agency’s statement.

At issue is care for criminal defendants who appear unable to understand court proceedings or aid in their defense.

But the state repeatedly failed to meet 28-day deadlines for evaluation and treatment, leaving defendants in county jails. State officials have long blamed those delays on a nearly six-fold increase in the number of people ordered to undergo mental competency evaluations, and a 12-fold increase in people ordered to undergo restorative treatment.

Friday’s agreement largely mirrored a trove of recommendations issued by a court-appointed special master, who criticized the state’s current system as “scattershot” and “untethered to a unified, cohesive vision” in a January report.

The agreement includes several mandates for the state, including:

• Hasten transfer of the most severely mentally ill defendants to a state hospital within seven days — four times as quickly as before;

• Hire several clinicians to work with court officials and community service providers;

• Never again freeze hospital admissions for people who aren’t facing criminal charges, as the agency did this year.

In exchange for shortened transfer deadlines for the most mentally ill defendants, the nonprofit allowed the state extra time over the next two years to care for other defendants awaiting restorative treatment, allowing up to 56 days before an incompetent defendant must go to the hospital.

Also, the same court-appointed special master will monitor the department’s progress and approve of any plans it devises. It also requires the department to create a plan for more widespread reforms — one that creates a more community-based treatment system for those defendants.

“That is our main goal — is that people who do not need to be institutionalized will not be,” said Alison Butler, the nonprofit’s legal director.

The agreement is not a settlement, but a consent decree — a type of agreement meant to ensure quicker and more legally-enforceable compliance. Any fines will go into a trust designed specifically to fund community mental health services not associated with the agency.